Volkswagen's U.S. Auto Sales Got Crushed in November

On Tuesday, Volkswagen of America (VLKAY) reported that it delivered 23,882 vehicles in November 2015, a 25% decline from the same month last year. Volkswagen says the sales down numbers were caused by the recent sales halt for all 2.0-liter 4-cylinder and 3.0-liter V6 turbocharged direct injection (TDI) vehicles. Volkswagen stopped selling the cars after the Environmental Protection Agency and the California Air Resources Board sent two notices alleging the company used illegal software to mask emissions.

Meanwhile, Audi’s November 2015 sales in the U.S. managed to rise 0.4% to 16,700 vehicles, even after pulling models that U.S. regulators say contain illegal emissions software. The small sales increase was enough to push Audi to a new record month of sales. Over the year’s first 11 months, Audi’s U.S. sales reached 181,803 vehicles, up 11.7% from 162,773 vehicles sold in the same period last year.

Volkswagen’s troublesome sales period began in September 2015, when it became the target of investigations after the EPA accused the company of installing illegal software in TDI diesel engines. These so-called defeat devices allowed the vehicle’s nitrogen oxide output to meet U.S. standards during regulatory testing, but then produced up to 40 times higher nitrogen oxide in real driving conditions.

In November, Volkswagen announced that a software update and piece of hardware would repair the majority of the diesel vehicles in Europe that had defeat devices installed in their engines. However, the recall can only be used to fix the cars in Europe. U.S. regulators have not approved Volkswagen’s recall plans yet. The ongoing emissions cheating scandal has affected an estimated 11 million cars globally, including about 500,000 vehicles in the U.S.

As a result, domestic sales of Volkswagen brands likely won’t recover soon. And Audi could also experience a similar drop-off in sales. Volkswagen still faces considerable challenges in the U.S., where emissions regulations are tougher.

Also, new allegations have popped up, accusing Volkswagen of developing and installing software that masks emissions, a violation of the Clean Air Act. The illegal software was reportedly equipped in certain vehicles with 3.0-liter V6 diesel engines, which Audi designed, for model years 2014 through 2016. These accusations widened the emissions scandal into Volkswagen’s other companies including Porsche.

Audi initially denied a defeat device was in its 3.0-liter engine. It has since admitted that many of its diesel models dating back to 2009, including the A6, A7, A8, Q5 and Q7, contain the illegal software. The VW Touareg and Porsche Cayenne, which have been using the diesel engines in the U.S. since 2013, also contain defeat devices. Audi has said a software update can correct the issue.

However, Volkswagen’s numbers stand in stark contrast to the rest of the U.S. auto industry, which saw November auto sales rise on demand for sport utility vehicles and seasonal marketing promotions. General Motors (GM) said on Tuesday the U.S. auto industry will sell 18.2 million vehicles for the month at an annualized rate. This estimate matches most analysts’ predictions that 2015 sales will top the 17.35 million vehicles sold in 2000, a record year according to the U.S. Bureau of Economic Analysis.

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